2003 (8) TMI 58 - HC - Central Excise

Summary

Issues Involved:
1. Legitimacy of the demand for recovery of rebate of duty wrongly granted.
2. Validity of statements made by the Petitioners under duress.
3. Linkage between exported goods and duty-paid goods.
4. Invocation of the extended period of limitation.
5. Handling of the case by the Excise Authorities.

Issue-wise Detailed Analysis:

1. Legitimacy of the Demand for Recovery of Rebate of Duty Wrongly Granted:
The Joint Secretary of the Government of India upheld the orders of the lower authorities, confirming the demand for recovery of rebate of duty wrongly granted to the Petitioners. The authorities found that the Petitioners could not establish the linkage between the exported fabrics and the duty-paid fabrics purchased for export. The Additional Commissioner of Central Excise confirmed the demand and levied penalties on the Petitioners, which was upheld by the Commissioner of Central Excise (Appeals) and the Joint Secretary. The High Court found no fault with the orders passed by the authorities below, as the Petitioners failed to prove that the export goods were made from duty-paid raw materials.

2. Validity of Statements Made by the Petitioners Under Duress:
The Petitioners argued that the statements of Petitioner No. 2 were taken under duress and did not reflect the correct position. However, the High Court noted that the statements recorded under Section 14 of the Central Excises and Salt Act, 1944 were never retracted and were voluntarily made. The Court emphasized that vague statements made in reply to the show cause notice cannot be considered a retraction. The Court also highlighted that the statements were sought to be retracted only after several years, indicating that the retraction was merely an afterthought.

3. Linkage Between Exported Goods and Duty-Paid Goods:
The Petitioners contended that the linkage between the exported goods and the duty-paid fabrics could be established through various documents. However, the Court found that the Petitioners did not maintain any stock register and could not provide any document to show that the fabrics purchased from dealer C were the same fabrics on which duty had been paid by dealer A. The Court noted discrepancies in the length of the fabrics purchased and exported and concluded that the Petitioners failed to unequivocally establish the linkage between the export goods and the duty-paid goods.

4. Invocation of the Extended Period of Limitation:
The Petitioners argued that the show cause notices were time-barred as the factual position was within the knowledge of the Department. The Court, however, held that the Excise Authorities were justified in invoking the extended period of limitation due to the discrepancies and the Petitioners' failure to establish the linkage between the export goods and the duty-paid goods. The Court rejected the contention that the show cause notice was barred by limitation.

5. Handling of the Case by the Excise Authorities:
The Court expressed dissatisfaction with the manner in which the case was handled by the Excise Authorities. The Court noted that despite knowing in September 1995 that the certificates issued by the Excise Officers were incorrect, no action was taken against those officers. The Court criticized the inaction of the higher authorities in the Central Excise Department and emphasized the need for immediate and prompt action to prevent such cases from recurring.

Conclusion:
The High Court dismissed the petition with costs, upholding the orders of the authorities below. The Court found that the Petitioners failed to establish the linkage between the exported goods and the duty-paid fabrics, and the statements made by Petitioner No. 2 were voluntarily given and not retracted. The Court also justified the invocation of the extended period of limitation by the Excise Authorities and criticized the inaction of the higher authorities in handling the case.